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How Do International Trade Gains Affect Energy Prices? Evidence from the OECD Economies

Author

Listed:
  • Wenchao Pan
  • Hemachandra Padhan
  • Sujit Kumar Pruseth
  • Santosh Kumar Sahu
  • Umakant Dash
  • Giray Gozgor

Abstract

This paper examines the influence of international trade gains (measured by the International Trade Potential Index) on real energy prices using panel data from 28 OECD economies from 1995 to 2015. The empirical models also control the role of gross domestic product per capita and total population. The paper utilises the Dynamic Common Correlated Effects, Cross-sectionally Augmented Distributed Lag and the Augmented Mean Group estimations. The findings suggest that higher gains from international trade are associated with increased energy prices. The evidence is critical because policymakers should understand the trade-offs between promoting international trade and managing energy costs. Since trade boosts drive up energy prices, governments should implement measures to mitigate the impact on consumers and industries, such as energy efficiency programs or investments in alternative energy sources.

Suggested Citation

  • Wenchao Pan & Hemachandra Padhan & Sujit Kumar Pruseth & Santosh Kumar Sahu & Umakant Dash & Giray Gozgor, . "How Do International Trade Gains Affect Energy Prices? Evidence from the OECD Economies," Politická ekonomie, Prague University of Economics and Business, vol. 0.
    • Handle: RePEc:prg:jnlpol:v:preprint:id:1538
    DOI: 10.18267/j.polek.1538
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